Knowing where to spend capital is key to acquiring funding

5/24/2011

Ask any small business owner what their top concerns are and they will likely mention acquiring commercial loans. According to Ron Walker, co-founder of small business lender Next Street, entrepreneurs should use their loans to carry out their basic business model - this will inspire the most confidence from financial institutions.

"So if you're going for operating capital, [lenders] want to see a detailed analysis of what that capital is used for, whether it's for people, whether it's for building your operations, whether it's for executing on models," Walker told The Street. "They want to know and see pretty clearly what the capital will be used for, but ultimately today they want to see what the result is."

Other ways that small businesses can maximize their chances of getting commercial loans is by having a detailed record of their finances and their ability to pay debt off.

While small business owners would say that acquiring the necessary funding is a top challenge, financial institutions say otherwise. In fact, they assert that entrepreneur loan demand is so low that many haven't even applied for money from the Small Business Lending Fund.